Business Property Relief (BPR) for an EIS investment fund

[dominoman]

I understand the rules around BPR for IHT. However you can't claim Business Relief if the business or company mainly deals with securities, stocks or shares, land or buildings, or in making or holding investments.

My late father had a significant holding in an EIS fund run by an investment company. The EIS fund invests in small companies, all of which qualify for EIS. However, do I understand it right that my father's holding would not qualify for BPR for IHT?

One of the EIS funds he invested in was run as an LLP. In that case if I understand correctly the individual holdings within the fund do qualify for BPR, though the committed (but as yet uninvested) cash in the fund wouldn't?

[AGoodman]

You should consider getting proper advice on the LLP fund. The legislation suggests (and I think HMRC view) is that the LLP acts as a blocker for BPR but there is an arguable interpretation that you can look through the LLP.

Many EIS funds are not actually funds in the usual sense - but rather a bare trust where your father would have had a direct beneficial interest in the underlying EIS shares. Those funds may well qualify for BPR. It probably won't be clear from the marketing materials but you could look for more detailed documents or ask the managers.